By ETimes
Khaya Cement (formerly Lafarge Cement Zimbabwe) net loss widened 443.72% year on year to $265.2 billion in the six months ended 30 June 2023 (H1 2023), up from $48.8 billion in H1 2022.
This was attributed to foreign exchange losses.
Accordingly, the cement manufacturer’s inflation-adjusted operating loss increased to $378.4 billion from $38.7 billion in H1 2022.
“The increase in the operating loss position was primarily driven by the foreign currency exchange losses arising from the revaluation of the foreign currency-denominated long-term borrowing,” chairman Kumbirayi Katsande said in a statement accompanying the company’s unaudited preliminary financial results.
“This was, in turn, a result of the depreciation of the local currency against the US dollar, which moved from US$1: 671.45 at the end of December 2022 to USD$1: 5,739.80 at the end of June 2023.”
Revenues rose 210% to $99.8 billion from $32.2 billion in the prior period after booking volume increase.
“Cement volumes increased by 117% as production ramped up following the restoration of the collapsed cement mill roof and commissioning of the new Vertical Cement Mill (VCM) whilst aggregates and Dry Motor (DMO) volumes increased by 213% and 211% respectively versus the same period last year,” Katsande said.
“It is also worth noting that the demand for both low and high strength cement remained strong during the period under review.”
The company’s revenue was highly skewed towards the greenback.
“The company earned 89% of its revenue in foreign currency, an increase of 100% from the previous year’s comparative period,” he said.
The was a modest reduction in gross profit margin, from 37.1% in H1 2022 to 35.3%.
“The proportion of sales, general and administration expenses to revenue improved from 54% recorded in the prior year’s comparative period to 41% during the period under review as management focused on cost containment as well as operational efficiencies.”
Khaya Cement did not declare a dividend, citing the need to ensure adequate working capital.
As of June 30, 2023, the company’s net long-term borrowings were $268.3 billion, up from $62.6 billion as of June 30, 2022.
Property, plant and equipment declined 2.92% to $143,9 billion from $148,23 in the comparative period, which is not a good sign for the going concern of the cement maker – Harare